Correlation Between Universal Technical and Elite Education

Can any of the company-specific risk be diversified away by investing in both Universal Technical and Elite Education at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Universal Technical and Elite Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Universal Technical Institute and Elite Education Group, you can compare the effects of market volatilities on Universal Technical and Elite Education and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Universal Technical with a short position of Elite Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Technical and Elite Education.

Diversification Opportunities for Universal Technical and Elite Education

0.88

Correlation Coefficient

Universal Technical  Elite Education

Very poor diversification

The 3 months correlation between Universal and Elite is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and Elite Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Education Group and Universal Technical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Universal Technical Institute are associated (or correlated) with Elite Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Education Group has no effect on the direction of Universal Technical i.e., Universal Technical and Elite Education go up and down completely randomly.

Pair Corralation between Universal Technical and Elite Education

Considering the 90-day investment horizon Universal Technical Institute is expected to generate 0.32 times more return on investment than Elite Education. However, Universal Technical Institute is 3.11 times less risky than Elite Education. It trades about 0.12 of its potential returns per unit of risk. Elite Education Group is currently generating about 0.02 per unit of risk. If you would invest  629.00  in Universal Technical Institute on September 4, 2024 and sell it today you would earn a total of  2,015  from holding Universal Technical Institute or generate 320.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.59%
Values	Daily Returns

Universal Technical Institute  vs.  Elite Education Group

Universal Technical

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Elite Education Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Education Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Elite Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Universal Technical and Elite Education

The main advantage of trading using opposite Universal Technical and Elite Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Technical position performs unexpectedly, Elite Education can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Elite Education will offset losses from the drop in Elite Education's long position.

The idea behind Universal Technical Institute and Elite Education Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.